Objective:- Objective of this project report is to study thesupply chain management practices at Zara, one of world’s largest retail chainin fashion and apparel industry. Objective is also to get the insight of allthe changes implemented by Zara and their effect on efficiency andprofitability improvement. Aboutthe company: – Zara enjoyed 77th position in “The100 Top Global Brands” in 2005. As of 2018, Zara ranks 51st Rank inForbes World’s most valuable brands.
The sales turnover of Zara in 2018 is$17.2 billion. By 2000, Zara had its operations in more than 50 countries. Zaramanufactures around 450 million clothes every year.
Zara has more than 2,200 stores across 93 countries witharound 436 stores in Spain alone as of in 2018. Ortega’sparent company Inditex consisting of Zara and other entitiesaltogether, reported sales of US $20.7 billion in 2012, 66% of which wascontributed by Zara (US $13.6 billion in total).Zara is a fashion retailer chainheadquartered in Arteixo, Galicia, Spain.
Zara was founded by Amancio Ortega in1975. Rosalia Mera, who co-founded Zara with her former husband Amancio Ortega,died in 2013 at the age of 69. She was the wealthiest self-made woman inthe world with a fortune estimated at $6.
1 billion at the time of her death. Ortegain 1963 started his own retail business named Confecciones Goa, to manufacturehousecoats. A German customer cancelled a major order in 1975 after whichOrtega started selling clothes from an outlet in his factory. He called thisoutlet as Zara. Very soon Zara started making its presence in different citiesin Spain.
Zara made its first appearance in New York in 1989 and Paris in 1990and kept on expanding globally. Whatis Supply Chain Management: – SupplyChain Managementconstitute of certain approaches to efficiently integrate the flow ofmaterials, finances, and information from suppliers, manufacturers,wholesalers, distributors, retailers to the final customer, and back again. Supply chain management (SCM) is theoversight of materials, information, and finances as they move in a processfrom supplier to manufacturer to wholesaler to retailer to consumer. Supply chain management involvescoordinating and integrating these flows both inside and outside the company.
It is said that the ultimate goal of any effective supply chain managementsystem is to reduce inventory, improve efficiency and productivity toultimately increase profitability and customer satisfaction. Organizations increasingly find thatthey must rely on effective supply chains, or networks, to compete in theglobal market and networked economy.Advantages of an integrated SCM (Supply Chain Management)Systems are: -Lower Costs – After implementing an efficientSupply Chain Management system in a business, the company can lower cost of rawmaterials drastically. This system efficiently plans for materials to bebrought to your company from the lowest cost provider possible and at just theright time to ensure there is no excess or deficiency in the material.
A good SupplyChain Management system can enhance company’s relationships with suppliers, vendorsand customers so that the cost cutting opportunities like discounts on a volumecan be availed or given.Improved Collaboration – A Good Supply Chain Managementsystem with appropriate IT support can allow a company to know the status of rawmaterials and finished goods are available by tracking with suppliers anddistributors. SCM can also keep track of where good are to be delivered or sent.
This transparency keeps relation between businesses strong. Generally, the reportsare automatically created in these systems which keep the managers updated aboutevery step of supply chain. These reports also help businesses to analyzepotential areas for improvement.Cycle Times – The time taken by a businessto turn a product from the raw material to finished product, supply it to the distributorand receive the money is called a cycle time. Using this money received companiesbuy new raw materials and same cycle repeats.
Any delay or bottleneck in any ofthese processes can increase the cycle time which can harm the businesses in competitiveenvironment. A good Supply Chain Management system reduces cycle time andensure that raw materials are provided when they are needed so production neverstops.Resolving Conflict – A business never always runs smoothlyas there could number of factors that can lead to problems such as issues with laborsin the production. If the distributor goes out of business, you will have tofind another way to sell the product. A SCM system lets your company bettercope with problems at either side of the production spectrum. You can quicklyand easily figure out a response to the problem instead of being surprised byit at a later time.